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2013-01-21

A potential crackdown on graft by China's new leadership triggers a property sell-off

Chinese home buyers look at models of an apartment project at a real estate fair in Ningbo, Nov. 2, 2012. ImagineChina

High-ranking Chinese officials are scrambling to sell off their secret property investments, apparently ahead of a promised crackdown on corruption under president-in-waiting Xi Jinping's leadership, according to industry sources and recent media reports.

The ruling Chinese Communist Party has vowed to crack down on government officials who own huge property investment portfolios, according to a report at the weekend in the Economic Observer newspaper.

However, many do so anonymously, the report said.

Luxury residential property sales are booming in around 45 Chinese cities, with a hundred-fold rise in the number of property owners in some areas, the paper said, adding that around 60 percent of the properties were anonymously owned, or held in other people's or in company names.

Investigations had revealed that some of the owners were high-ranking officials or executives in state-owned enterprises, and the Party's Central Commission for Discipline Inspection had spoken to more than 120 officials, warning them to stop their property market activities, the report said.

Rise in property listings

An employee who answered the phone at a real estate agent in Shanghai said the city had seen a huge rise in the number of property listings recently, and that most of the landlords preferred not to be identified.

"Yes, there are [officials selling]," the employee said, asked if the rise in listings was linked to fears of an anti-corruption drive promised by the new administration under president-in-waiting Xi Jinping after the next generation of leaders was announced in November.

"This probably started at around the beginning of December; we were just beginning to see the effects," the employee said. "By the middle of December it had become really obvious, especially by January this year."

"Our figures show a volume of sales that is equal to the volume for the previous three months."

"We are selling an apartment a day at the moment."

Asked if the landlords' identities were known, the employee said: "No, we wouldn't know that, basically."

"Especially not in the high-end residential sector, which is what we do. Some people are sensitive about their identity, shall we say?"

"They don't want this made public...and some of them entrust a representative to do it for them, so it's highly unlikely we would even see the owner," he said.

Online stories

The mass sell-off comes as a number of stories have surfaced online in recent weeks about single landlords who own dozens of luxury apartments.

It has led to renewed calls for a "sunshine law" forcing government and Party officials to declare their assets publicly.

Beijing-based Zhu Ruifeng, who runs the anti-graft website Supervision by the People, said the Internet had been crucial in revealing a slew of recent cases of mini property tycoons.

"The Internet is our best weapon [in this struggle]," Zhu said. "Under the current system, if we don't use this method, the authorities will never mend their ways."

"We need to use the Internet to uphold the right of the people to oversee their government, and their freedom of speech."

Social media commentator Mo Jufeng said he thought Xi's threat of a renewed anti-graft campaign was one factor behind the sell-off.

"After Xi Jinping took over, he talked a lot about cleaning up government," Mo said. "Another factor is that there has been a change of administration; the old ones are leaving and the new ones are coming in."

"Xi and [premier] Li [Keqiang] are the new bosses now, and they are going to be going after some of the older guys, to establish themselves in power," he said. "So definitely some people will be brought down by this."

He said large numbers of officials are likely trying to protect themselves by selling off their assets.

"Then they can head off overseas with the money," Mo said.

Reported by Yang Fan for RFA's Mandarin service, and by Grace Kei Lai-see for the Cantonese service. Translated and written in English by Luisetta Mudie.